Stockholders' Equity | 9 Months Ended |
Sep. 30, 2014 |
Stockholders Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
Note 11 – Stockholders’ Equity |
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Net Income (Loss) Per Common Share |
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Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders, less dividends on restricted stock expected to vest plus gains on redemptions on common stock, by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted average number of common shares outstanding and any potential dilutive shares for the period. Net income (loss) attributable to common stockholders is computed by adjusting net income (loss) for the non-forfeitable dividends paid on non-vested restricted stock. |
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The following table reconciles the components of basic and diluted net loss per common share: |
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| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2014 | | 2013 | | 2014 | | 2013 | |
Net (loss) income from continuing operations attributable to common stockholders(3) | | $ | -2,260,706 | | $ | 534,388 | | | -7,852,370 | | $ | -1,798,372 | |
Dividends on restricted stock expected to vest and OP Units(3) | | | -90,485 | | | -2,773 | | | -135,596 | | | -8,409 | |
Gain on redemption of common stock(2) | | | — | | | — | | | — | | | 1,575 | |
Basic net (loss) income from continuing operations attributable to common stockholders(3) | | $ | -2,351,191 | | $ | 531,615 | | $ | -7,987,966 | | $ | -1,805,206 | |
Basic net income (loss) from discontinued operations attributable to common stockholders(3) | | $ | 114,115 | | $ | -2,675 | | $ | 123,040 | | $ | -92,211 | |
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Weighted average common shares outstanding(3) | | | 5,877,417 | | | 1,048,854 | | | 4,269,378 | | | 1,024,997 | |
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Potential dilutive shares(1) | | | — | | | 6,908 | | | — | | | — | |
Weighted average common shares outstanding and potential dilutive shares(4) | | | 5,887,417 | | | 1,055,762 | | | 4,269,378 | | | 1,024,997 | |
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Basic (loss) income from continuing operations per share(3) | | $ | -0.4 | | $ | 0.51 | | $ | -1.87 | | $ | -1.76 | |
Basic income (loss) from discontinued operations per share(3) | | $ | 0.02 | | $ | — | | $ | 0.03 | | $ | -0.09 | |
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Diluted (loss) income from continued operations per share(4) | | $ | -0.4 | | $ | 0.5 | | $ | -1.87 | | $ | -1.76 | |
Diluted income (loss) from discontinued operations per share(4) | | $ | 0.02 | | $ | — | | $ | 0.03 | | $ | -0.09 | |
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The number of shares and per share amounts for the prior period have been retroactively restated to reflect the two reverse stock splits of the Class B common stock discussed below. |
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| -1 | Excludes 4,794 and 5,726 shares of Class B common stock and 282,759 and 188,506 OP Units for the three and nine months ended September 30, 2014, respectively, and 7,059 shares of Class B common stock for the nine months ended September 30, 2013, related to non-vested restricted stock and OP Units, as the effect would be anti-dilutive. Also excludes any potential dilution related to the 1,000 shares of convertible stock outstanding as of September 30, 2013, as there would be no conversion into common shares. | | | | | | | | | | | |
| -2 | Represents the difference between the fair value and carrying amount of the common stock upon redemption. | | | | | | | | | | | |
| -3 | For 2014, amounts relate to shares of the Company’s Class A, Class B-1, B-2, B-3 common stock and LTIP Units outstanding. For 2013, amounts relate to common shares outstanding. | | | | | | | | | | | |
| -4 | For 2014, amounts relate to shares of the Company’s Class A, Class B-1, B-2, B-3 common stock and OP and LTIP Units outstanding. For 2013, amounts relate to common shares outstanding. For 2014, amounts exclude OP Units as the effect would be anti-dilutive. | | | | | | | | | | | |
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Common Stock |
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The Company raised capital in a continuous registered offering, carried out in a manner consistent with offerings of non-listed REITs, from its inception until September 9, 2013, when it terminated the continuous registered offering in connection with the Board’s consideration of strategic alternatives to maximize value to the Company’s stockholders. Through September 9, 2013, the Company had raised an aggregate of $22.6 million in gross proceeds through its continuous registered offering, including its distribution reinvestment plan. |
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On January 23, 2014, the Company's stockholders approved the second articles of amendment and restatement to our charter, or Second Charter Amendment, that provided, among other things, for the designation of a new share class of Class A common stock, and for the change of each existing outstanding share of our common stock into: |
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| • | 1/3 of a share of our Class B-1 common stock; plus | | | | | | | | | | | |
| • | 1/3 of a share of our Class B-2 common stock; plus | | | | | | | | | | | |
| • | 1/3 of a share of our Class B-3 common stock. | | | | | | | | | | | |
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This transaction was effective upon filing the Second Charter Amendment with the State Department of Assessments and Taxation of the State of Maryland on March 26, 2014. Immediately following the filing of the Second Charter Amendment, we effectuated a 2.264881 to 1 reverse stock split of our outstanding shares of Class B-1 common stock, Class B-2 common stock and Class B-3 common stock, and on March 31, 2014, we effected an additional 1.0045878 to 1 reverse stock split of our outstanding shares of Class B-1 common stock, Class B-2 common stock and Class B-3 common stock. |
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We refer to Class B-1 common stock, Class B-2 common stock and Class B-3 common stock collectively as “Class B” common stock. We listed our Class A common stock on the NYSE MKT on March 28, 2014. Our Class B common stock is identical to our Class A common stock, except that (i) we do not intend to list our Class B common stock on a national securities exchange, and (ii) shares of our Class B common stock will convert automatically into shares of Class A common stock at specified times, as follows: |
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| • | March 23, 2015, in the case of our Class B-1 common stock; | | | | | | | | | | | |
| • | September 19, 2015, in the case of our Class B-2 common stock; and | | | | | | | | | | | |
| • | March 17, 2016, in the case of our Class B-3 common stock. | | | | | | | | | | | |
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Operating Partnership and Long-Term Incentive Plan Units |
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On April 2, 2014, concurrently with the completion of the IPO, the Company entered into the Second Amended and Restated Agreement of Limited Partnership, or the Partnership Agreement Amendment, of its Operating Partnership, Bluerock Residential Holdings, L.P. Pursuant to the Partnership Agreement Amendment, the Company is the sole general partner of the Operating Partnership and may not be removed as general partner by the limited partners with or without cause. The limited partners of the Operating Partnership, which are also parties to the Partnership Agreement Amendment, are Bluerock REIT Holdings, LLC, our Manager, BR-NPT Springing Entity, LLC, or NPT, Bluerock Property Management, LLC, or BPM, and the Company’s former advisor, Bluerock Multifamily Advisor, LLC, or our Former Advisor, all of which are affiliates of the Company. |
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Prior to the completion of the IPO, the Company owned, directly and indirectly, 100% of the limited partnership units in the Operating Partnership. Effective as of the completion of the IPO, limited partners other than the Company now own approximately 9.87% of the Operating Partnership (4.59% are held by OP Unit holders and 5.28% are held by LTIP Unit holders.) |
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The Partnership Agreement Amendment provides, among other things, that the Operating Partnership initially has two classes of limited partnership interests, which are units of limited partnership interest, or OP Units, and the Operating Partnership’s long-term incentive plan units, or LTIP Units. In calculating the percentage interests of the partners of the Operating Partnership, holders of LTIP Units are treated as holders of OP Units and LTIP Units are treated as OP Units. In general, LTIP Units will receive the same per-unit distributions as the OP Units. Initially, each LTIP Unit will have a capital account balance of zero and, therefore, will not have full parity with OP Units with respect to liquidating distributions. However, the Partnership Agreement Amendment provides that “book gain,” or economic appreciation, in the Company’s assets realized by the Operating Partnership as a result of the actual sale of all or substantially all of the Operating Partnership’s assets or the revaluation of the Operating Partnership’s assets as provided by applicable U.S. Department of Treasury regulations will be allocated first to the holders of LTIP Units until the capital account per unit of LTIP Unit holders is equal to the average capital account per-unit of the Company’s OP Units in the Operating Partnership. We expect that the Operating Partnership will issue OP Units to limited partners, including the Company, in exchange for capital contributions of cash or property, and will issue LTIP Units pursuant to the Company’s 2014 Equity Incentive Plan for Individuals and 2014 Equity Incentive Plan for Entities, or collectively the Incentive Plans, to persons who provide services to the Company, including the Company’s officers, directors and employees. |
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Pursuant to the Partnership Agreement Amendment, any holders of OP Units other than the Company or its subsidiaries, will receive redemption rights, which, subject to certain restrictions and limitations, will enable them to cause the Operating Partnership to redeem their OP Units in exchange for cash or, at the Company’s option, shares of the Company’s Class A common stock on a one-for-one basis. The Company has agreed to file, not earlier than one year after the closing of the IPO, one or more registration statements registering the issuance or resale of shares of its Class A common stock issuable upon redemption of the OP Units issued upon conversion of LTIP Units, which include those issued to the Manager and the Former Advisor. Subject to certain exceptions, the Operating Partnership will pay all expenses in connection with the exercise of registration rights under the Partnership Agreement Amendment. |
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Share Repurchase Plan and Redeemable Common Stock |
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On June 27, 2013, following a meeting of its Board, the Company decided to explore strategic alternatives to enhance the growth of its portfolio. In anticipation of its review of strategic alternatives, the Board, including all of the Company’s independent directors, voted to suspend the Company’s share repurchase plan as of June 27, 2013 through the third quarter of 2013. In addition, the Board, including all of the Company’s independent directors, voted to suspend payment of pending repurchase requests under the share repurchase plan that were queued as of June 27, 2013 for repurchase. |
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On August 23, 2013, the Board, including all of the Company’s independent directors, voted to terminate the Company’s Distribution Reinvestment Plan, or the DRP. The termination of the DRP eliminated the source of proceeds for the repurchase of shares under the share repurchase plan and, therefore, the Board, including all of the Company’s independent directors, voted to terminate the share repurchase plan, effective as of September 9, 2013. |
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The aggregate amount of any accrued redemptions and redeemable common stock were reclassified back to additional paid-in capital at that time. |
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Stock-based Compensation for Independent Directors |
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Prior to the Company’s IPO on April 2, 2014, the Company’s independent directors received an automatic grant of 5,000 shares of restricted stock on the initial effective date of the continuous registered offering and received an automatic grant of 2,500 shares of restricted stock when such directors were re-elected at each annual meeting of the Company’s stockholders thereafter through the 2013 annual meeting on August 5, 2013. To the extent allowed by applicable law, the independent directors were required to pay any purchase price for these grants of restricted stock. The restricted stock vested 20% at the time of the grant and 20% on each anniversary thereafter over four years from the date of the grant. All restricted stock receive distributions, whether vested or unvested. The value of the restricted stock granted was determined at the date of grant. Commencing with the Company’s IPO, the Directors will no longer receive automatic grants upon appointment or reelection at each annual meeting of the Company’s stockholders. |
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A summary of the status of the Company’s non-vested shares as of September 30, 2014, and changes during the nine months ended September 30, 2014, is as follows: |
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Non Vested shares | | Shares(1) | | Weighted average grant-date | | | | | | | | |
fair value(1) | | | | | | | |
Balance at January 1, 2014 | | 6,593 | | $ | 150,000 | | | | | | | | |
Granted | | — | | | — | | | | | | | | |
Vested | | -2,637 | | | -60,000 | | | | | | | | |
Forfeited | | — | | | — | | | | | | | | |
Balance at September 30, 2014 | | 3,956 | | $ | 90,000 | | | | | | | | |
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(1) The number of shares and per share amounts for the prior period have been retroactively restated to reflect the two reverse stock splits of the Class B common stock discussed above. |
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At September 30, 2014, there was $82,500 of total unrecognized compensation cost related to unvested restricted stocks granted under the independent director compensation plan. The original cost is expected to be recognized over a period of four years. The total fair value of shares vested during the nine months ended September 30, 2014 was $60,000. |
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The Company currently uses authorized and unissued shares to satisfy share award grants. |
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Distributions |
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On December 27, 2013, the Board authorized, and the Company declared, distributions on its common stock, for the month of January 2014 at a rate of $0.05945211 per share to stockholders of record at the close of business on January 31, 2014. Distributions payable to each stockholder of record were paid in cash on February 3, 2014. |
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On March 13, 2014, the Board authorized, and the Company declared, distributions on its common stock, for the month of February 2014, at a rate of $0.05369868 per share for stockholders of record at the end of business on February 28, 2014. Distributions payable to each stockholder of record were paid in cash on or before the 15th day of the following month. |
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On April 8, 2014, the Board declared monthly dividends for the second quarter of 2014 equal to a quarterly rate of $0.29 per share on both the Company’s Class A common stock and Class B common stock, payable to the stockholders of record as of April 25, 2014, May 25, 2014 and June 25, 2014, which will be paid in cash on May 5, 2014, June 5, 2014 and July 5, 2014, respectively. Holders of OP and LTIP Units are entitled to receive "distribution equivalents" at the same time as dividends are paid to holders of the Company's Class A common stock. |
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The declared dividends equal a monthly dividend on the Class A common stock and the Class B common stock as follows: $0.096666 per share for the distributions paid to stockholders of record as of April 25, 2014, $0.096667 per share for the distributions paid to stockholders of record as of May 25, 2014, and $0.096667 per share for the distributions paid to stockholders of record as of June 25, 2014. A portion of each distribution may constitute a return of capital for tax purposes. |
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On July 10, 2014, the Board declared monthly dividends for the third quarter of 2014 equal to a quarterly rate of $0.29 per share on the Company’s Class A common stock and $0.29 per share on the Company’s Class B common stock, payable to the stockholders of record as of July 25, 2014, August 25, 2014 and September 25, 2014, which will be paid in cash on August 5, 2014, September 5, 2014 and October 5, 2014, respectively. Holders of OP and LTIP Units are entitled to receive "distribution equivalents" at the same time as dividends are paid to holders of the Company's Class A common stock. |
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The declared dividends equal a monthly dividend on the Class A common stock and the Class B common stock as follows: $0.096667 per share for the dividend paid to stockholders of record as of July 25, 2014, $0.096667 per share for the dividend paid to stockholders of record as of August 25, 2014, and $0.096666 per share for the dividend paid to stockholders of record as of September 25, 2014. A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate. |
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Distributions for the nine months ended September 30, 2014 were as follow: |
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| | Distributions | | | | | | | |
2014 | | Declared | | Paid | | | | | | | |
First Quarter | | | | | | | | | | | | | |
Common Stock | | $ | 273,028 | | $ | 416,491 | | | | | | | |
Class A Common Stock | | | - | | | - | | | | | | | |
Class B-1 Common Stock | | | - | | | - | | | | | | | |
Class B-2 Common Stock | | | - | | | - | | | | | | | |
Class B-3 Common Stock | | | - | | | - | | | | | | | |
OP Units | | | - | | | - | | | | | | | |
LTIP Units | | | - | | | - | | | | | | | |
Total | | $ | 273,028 | | $ | 416,491 | | | | | | | |
Second Quarter | | | | | | | | | | | | | |
Common Stock | | $ | - | | $ | - | | | | | | | |
Class A Common Stock | | | 1,303,740 | | | 869,150 | | | | | | | |
Class B-1 Common Stock | | | 102,549 | | | 68,365 | | | | | | | |
Class B-2 Common Stock | | | 102,549 | | | 68,365 | | | | | | | |
Class B-3 Common Stock | | | 102,549 | | | 68,365 | | | | | | | |
OP Units | | | 82,000 | | | 54,667 | | | | | | | |
LTIP Units | | | 94,418 | | | 62,945 | | | | | | | |
Total | | $ | 1,787,805 | | $ | 1,191,857 | | | | | | | |
Third Quarter | | | | | | | | | | | | | |
Common Stock | | $ | - | | $ | - | | | | | | | |
Class A Common Stock | | | 1,303,765 | | | 1,303,771 | | | | | | | |
Class B-1 Common Stock | | | 102,552 | | | 102,552 | | | | | | | |
Class B-2 Common Stock | | | 102,552 | | | 102,552 | | | | | | | |
Class B-3 Common Stock | | | 102,552 | | | 102,552 | | | | | | | |
OP Units | | | 82,000 | | | 82,000 | | | | | | | |
LTIP Units | | | 94,418 | | | 94,418 | | | | | | | |
Total | | $ | 1,787,839 | | $ | 1,787,845 | | | | | | | |
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